The head office of the DPS in Kyiv informs that the object of VAT taxation is the operations of tax payers for the supply of goods/services, the place of supply of which in accordance with Art. 186 of the Tax Code of Ukraine is located in the customs territory of Ukraine (paragraphs “a” and “b” of paragraph 185.1 of article 185 of the PKU).
The supply of services means any operation that is not the supply of goods, or any other operation of transferring the right to objects of intellectual property rights and other intangible assets or the provision of other property rights in relation to such objects of intellectual property rights, as well as the provision of services , which are consumed in the process of committing a certain action or carrying out a certain activity (clause 14.1.185 clause 14.1 of article 14 of the Code of Civil Procedure).
Supply of goods – any transfer of the right to dispose of goods as the owner, including sale, exchange or donation of such goods, as well as supply of goods by court decision (item 14.1.191, item 14.1, article 14 of the Code of Civil Procedure).
According to Art. 837 of the Civil Code of Ukraine under a contract, one party (the contractor) undertakes to perform certain work at its own risk on behalf of the other party (the customer), and the customer undertakes to accept and pay for the work performed. Article 839 of the Civil Code stipulates that the contractor is obliged to perform the work specified in the contract with his own materials and means, unless otherwise stipulated by the contract.
According to Art. 840 of the Civil Code, if the work is performed partially or entirely from the customer’s material, the contractor is responsible for the improper use of this material. The contractor is obliged to provide the customer with a report on the use of the material and return its balance. If the work is performed from the customer’s material, the contract must establish the norms of material consumption, the terms of return of its balance and basic waste, as well as the responsibility of the contractor for non-fulfillment or improper fulfillment of his duties. The contractor is responsible for non-performance or improper performance of work caused by defects in the material provided by the customer, unless he proves that these defects could not have been detected by him upon proper acceptance of the material.
Therefore, raw materials, materials, fuel are the property of the customer, and when they are transferred to the executor for the provision of works (services), the ownership right does not pass to the executor, and therefore, for such operations, the customer does not accrue VAT tax liabilities.
Source: kyiv.tax.gov.ua
